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Whenever a family plans to buy their dream home, it is often suggested by financial advisors to make the wife a co-owner or co-applicant in the property registry and home loan. The question that arises in the minds of most people is whether banks really give loans at lower interest rates by including the wife’s name? The direct answer is-Yes, this is completely true. The Indian banking system and revenue regulations of state governments provide special financial concessions to promote women home buyers.
If the wife is a co-owner of the property and she joins the home loan as a co-borrower, not only do the loan interest rates become cheaper, but there is also a direct saving of lakhs of rupees in registry costs and income tax.
Most of the major banks in India (like SBI, HDFC Bank, ICICI Bank, Bank of Baroda etc.) and Housing Finance Companies (HFCs) offer home loan interest rates to women applicants. Special concession of 0.05% (5 basis points) Gives.
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Big savings in the long run: A discount of 0.05% may seem small, but on a 20 or 25 year home loan it can make a difference of lakhs of rupees.
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Example: Suppose you take a home loan of ₹50 lakh for 20 years. If the normal interest rate is 8.50% and it reduces to 8.45% in the wife’s name, there is a direct saving of around ₹35,000 to ₹50,000 in total interest payments.
Apart from home loans, huge exemption in stamp duty is given by the state governments at the time of property registration for registering property in the name of women or in joint ownership of husband and wife:
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Delhi: Stamp duty for men is 6%, while in the name of women it is only 4% (a direct saving of 2%).
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Uttar Pradesh and Haryana: Stamp duty for women buyers 1% to 2% discount Is provided.
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Maharashtra and Rajasthan: Here also concession in registration fee is applicable for women buyers.
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Cost Savings: If a flat worth ₹80 lakh is being purchased and 2% stamp duty is saved, then a direct benefit of ₹1.60 lakh is available at the time of registration itself.
If the wife is salaried/self-employed and is a joint owner of the property with the husband and a co-applicant for the loan, then both can claim separate tax exemptions under the Income Tax Act:
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Section 80C on Principal Repayment: Both husband and wife can claim tax deduction of ₹1.5 – ₹1.5 lakh separately (total up to ₹3 lakh).
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Section 24(b) on Interest Payment: Husband can avail annual tax exemption of ₹2 lakh and wife of ₹2 lakh (up to a total of ₹4 lakh) on home loan interest payments.
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Total Tax Savings: Both together can avail tax benefits on total home loan repayments up to ₹7 lakh every financial year.
If the bank is sanctioning a loan of ₹40 lakh based on the salary of a single person and you need ₹60 lakh, then by making your working wife a co-applicant, the combined income of both is counted together. This significantly increases your overall loan eligibility and chances of loan approval.
Even if the wife is not working (i.e. a housewife), the exemption in stamp duty and 0.05% concession in loan interest rate remains fully applicable. For this, banks keep only the condition that the wife should be a co-owner of the property and should be included in the loan agreement as a primary or secondary co-applicant. However, in case of no income, the benefit of double tax benefit and increase in loan eligibility will depend only on the husband’s income.